Jeb Hensarling, the chairman of the House Financial Services Committee, was critical of the CFTC’s announcement last week that trades conducted by U.S. firms for overseas clients should be moved through electronic trading platforms.
The CFTC said that a non U.S.-based swap dealer using personnel or agents in the U.S. to execute a swap with a non-U.S. party would generally be required to comply with transaction-level requirements.
Hensarling said the CFTC’s announcement does nothing but “inject more uncertainty into our weak economy.”
“The CFTC staff – not the commissioners, but the staff – decided late Thursday afternoon that swaps transactions that had been permissible Thursday afternoon would not be permissible on Friday morning,” Hensarling said. “This is yet another example of out-of-touch Washington bureaucrats making rules in a vacuum and acting with absolutely no regard for the impact their arbitrary and capricious actions have on our economy.”
The announcement closes a loophole banks have used to keep some of their swaps transactions off electronic platforms and away from CFTC rules designed to make the market more transparent. Banks and their counsel have said the staff advisory is so overly general it could expose their overseas transactions to even more regulation, SFGate reports.
“The CFTC is underfunded and understaffed, but it had the backbone to slam shut the latest loophole some swap dealers have concocted to circumvent U.S. rules,” Sen. Carl Levin (D-Mich.), who has led Senate investigations into trading by Goldman Sachs and JPMorgan Chase, said, according to SFGate.